Simpson Thacher Advising U.S. on Acquiring Bank Ownership Stakes
The Treasury Department is relying on the law firm Simpson Thacher & Bartlett to help it boost the economy.
Simpson Thacher will advise the department on how to take ownership stakes in banks, a Treasury official said in a speech today.
Neel Kashkari, assistant secretary for financial stability, told an international banking group that hiring the law firm is one of several steps the United States is taking to quickly implement its bailout plan, report the Wall Street Journal (sub. req.) and the Associated Press. Kashkari is interim head of the $700 billion bailout program.
The Treasury Department is designing a standardized program to purchase equity in a broad array of financial institutions, according to a Bloomberg account of Kashkari’s speech to the Institute of International Bankers. The program will be voluntary and “designed with attractive terms to encourage participation from healthy institutions.”
Kashkari said in his speech (posted by Wall Street Journal’s Real Times Economics blog) that he and Treasury Secretary Henry Paulson reached out to six law firms for advice and received two proposals. They selected Simpson Thacher on Friday and started work.
Representatives of Simpson Thacher did not immediately return phone messages requesting comment.
The bailout program had initially focused on buying distressed assets from banks, but Paulson indicated on Friday that the government would take an equity stake in banks, including those that are financially healthy, the New York Times reports.
